BHP gives up on Abbot Point terminal, cools growth elsewhere

BHP Billiton
has formally surrendered its right to build a new $US5 billion coal terminal at the port of Abbot Point on the north Queensland coast, as part of its response to persistent weakness in global coal markets.

The world’s biggest miner declared its intention to cease work on all growth projects in its Queensland coking coal business, except for those in execution, due to the economic climate in September last year. Two weeks ago, the company reached a final agreement with the North Queensland Bulk Ports Corporation that it would not go ahead with the development of terminal two (T2) at Abbot Point.

“Formal relinquishment of the right to develop T2 has now been agreed with North Queensland Bulk and the company will formally withdraw from related regulatory approvals," a company spokeswoman said in a statement emailed on Sunday.

The new terminal was to link Goonyella in the Bowen Basin, close to where BHP owns several mines in joint venture with Japan’s Mitsubishi, via a 250-kilometre rail line. The rail line would have been capable of carrying 60 million tonnes of coal a year, reducing the partners’ reliance on third-party haulage provider,
Aurizon
.

Red Hill and Saraji East developments shelved

At around the same time as the infrastructure plans were shelved, BHP discontinued environmental approvals processes for the Red Hill and Saraji East coking coal developments, which would have been serviced by the rail and port.

The company paid $2.45 billion to buy back the Saraji East project from New Hope Corporation in 2008 when coal prices were much stronger.

The only projects currently underway in the Queensland coal business are the $US1.87 billion development of the Caval Ridge mine and the $US1.5 billion stage three expansion of the Hay Point port.